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(Bloomberg) -- IAC/InteractiveCorp agreed to buy consumer-recommendation website Angie’s List Inc., intending to combine the business with its own HomeAdvisor online-review network and create a new publicly traded company.

Under terms of the deal, Angie’s List investors can choose either one Class A common share of the new company or $8.50 in cash for each share they own -- with the cash payout capped at $130 million, according to a statement from New York-based IAC, which is controlled by Barry Diller. The new company will be called ANGI Homeservices Inc.

At $8.50 a share, the deal values Angie’s List at more than $500 million, a 44 percent premium over the stock’s closing price of $5.89 Monday in New York. IAC will own 87 percent to 90 percent of the new company, depending on the number of investors who take the cash payout. Angie’s List shares jumped 42 percent to $8.39 in extended trading.

Angie’s List and HomeAdvisor connect consumers to plumbers and other home service providers over the internet. The deal combines two sets of consumers and service providers into one online service -- a big reason why IAC pursued the transaction, said Chief Executive Officer Joey Levin.

“What Angie’s List adds is fuel on both sides of the marketplace,” he said. “That improves that service experience -- consumers get faster and higher-quality responses.”

Levin wants to turn ANGI Homeservices into the next large on-demand online marketplace. Currently, the combined businesses only have 4 percent of the market for home services. Similar to other on-demand and e-commerce companies like Uber Technologies Inc. and Amazon.com Inc., the more participants on both sides of the marketplace, the more valuable it becomes.

“Home services is one of the last commerce categories where the vast majority of the market is still offline,” he said. “That’s a huge opportunity.”

Right now, HomeAdvisor can match customers with service professionals in minutes in some regions and categories. Adding Angie’s List will improve response times in more areas, Levin said.

HomeAdvisor is IAC’s fastest growing division. Revenue jumped 38 percent to $499 million last year. User growth has stalled at Angie’s, and the company has missed revenue estimates for eight straight quarters. Six months ago, the company said it was putting itself up for sale, and IAC joined the bidding process, Levin said.

IAC had tried before, making multiple offers in 2015. After being rejected, IAC took the pursuit public later that year with a higher offer price and a new letter to the Angie’s List board explaining why a deal would make sense. At the time, Diller’s conglomerate said it would also consider a stock-for-stock exchange that combined HomeAdvisor with Angie’s List.

Angie’s List’s directors again rebuffed IAC. The home services network said they believed the offer of $8.75 a share in cash "dramatically" undervalued the company. That offer represented a 10 percent premium over the share price at the time.

Angie’s List CEO Scott Durchslag, who joined just months prior to the first takeover bid, had recently formulated a plan for growth. He wanted to move the company beyond a directory and review collector for home services into a platform for consumers to connect to and hire contractors over the internet -- similar to HomeAdvisor’s business. The board and investors needed to review that turnaround strategy before considering acquisition offers, people familiar with the matter said at the time.

Durchslag scrapped Angie’s List’s membership fee, in favor of a freemium model: Members could access reviews for free but could pay for subscriptions to services like a personal assistant to gather estimates, hire contractors and schedule jobs. Durchslag struck an optimistic tone in February, touting progress with the transition.

The deal is slated to be completed by the end of this year, and IAC expects to be able to cut annual costs by $100 million to $250 million by the end of 2018. Job cuts are likely, though the company said HomeAdvisor’s rapid growth means it has plenty of open positions, which it will first try to fill internally. HomeAdvisor’s current CEO Chris Terrill will head the new company, and Angie’s List’s Durchslag will remain at least through the deal close.